Vehicle financing scheme by Automobile Assemblers Association of Ghana to be rolled out in September
The president of the Automobile Assemblers Association of Ghana (AAAG), Jeffrey Oppong Peprah, says an ecosystem where banks and other financial institutions collaborate with local assemblers to offer financial credit to vehicle buyers will be rolled out in September 2024.
This facility, similar to what pertains in Europe and the United States, will allow buyers to buy on credit and pay for their vehicles from the financial institutions offering them the credit.
“This will allow for a cashless system of buying cars in the country and pave the way for a well regulated auto industry with its attendant components industry,” Mr Peprah who is also the CEO of Volkswagen Ghana told the Graphic Business in an interview in Accra.
Auto loan challenges
In 2022, according to a report published by Ghana Automobile Dealers Association, the number of cars imported into the country totalled 100,000 units on average yearly. With the plan to have a vehicle financing scheme for locally made cars by the government still underway, loan accessibility for individuals remains a key challenge.
High-interest rates and low income among salaried earners in the country has continually contributed directly to low levels of vehicle ownership, which was recorded at 11% per 1000 inhabitants in the last few years. With most of the population living in the outskirts of Accra and other major cities, the daily commute via public means is a hustle you want to avoid if you are able to.
In addition, despite 80% of the businesses making up the informal sector in Ghana, financial institutions still consider it risky to lend SMEs due to a lack of proper business proposals or unprofitable investments which lead to high default rates.
OEMs and quality
Mr Peprah stated that the Original Equipment Manufacturers (OEMs) used in assembling vehicles in the country were the same used in advanced economies which would make it easier for financiers to offer credit for buyers to purchase these vehicles.
He also maintained that the government would play a pivotal role in this financing scheme by cushioning these financial institutions with incentives and other forms of guarantees to the banks and financing agencies to offer credits to buyers.
